British Panel Rejects Claim Of Sex Bias At Merrill

By HEATHER TIMMONS

Published: December 23, 2004

A British panel on Wednesday dismissed a high-profile sexual discrimination suit filed by a former executive against Merrill Lynch, but ruled that the woman who made the accusations had been poorly treated and unfairly dismissed.

Stephanie Villalba, a former top executive in Merrill's European private client business, was not the victim of gender discrimination or unequal pay, as she had claimed, an employment tribunal found. Her demand for £7.5 million ($14.4 million) in compensation, the largest sexual discrimination claim ever made in Britain, was denied.

The tribunal found, though, that Ms. Villalba, a 17-year employee of the firm, had been ''shabbily and unfairly treated,'' ''sidelined'' and ''belittled by colleagues'' -- though not because of her gender.

The three members of the tribunal said they were particularly disappointed with the conduct of Merrill Lynch's human resources department.

Under British law, Ms. Villalba could be entitled to as much as £55,000 ($106,000) for being dismissed unfairly, but no award has yet been determined by the court.

The 80-page ruling also described Merrill Lynch's bonus allocation system as ''haphazard,'' and noted that executives were often compensated based on rumor and ''anecdotal impressions of senior managers'' that had little to do with an employee's actual performance.

A Merrill Lynch spokesman, Michael O'Looney, called the decision a ''major victory.''

''We said from the start that this case was about performance, not gender,'' he said in a statement. ''Ms. Villalba was removed by the very same person who had promoted her into the position and who then replaced her with another woman.''

Mark King, a lawyer for the firm of Lewis Silkin who represented Ms. Villalba, said that his client was ''disappointed and distressed'' by the decision. The parties were not present in court for the ruling, which was released on Wednesday.

The decision followed detailed testimony from both sides this summer and fell to a three-member employment tribunal in the southern suburbs of London.

In Ms. Villalba's complaint, she said that Merrill Lynch had promoted her to a new position of increased responsibility, then undermined her authority because she was a woman. She also said that Merrill Lynch was arbitrarily allocating some profit and loss figures to different parts of its business, and that the bank had paid her much less salary and benefits than some of her underlings, without any explanation.

Merrill Lynch countered by calling nearly two dozen other employees as witnesses, including Ms. Villalba's former boss, Raymundo A. Yu Jr., who said that she did not have the skills necessary to do her new job.

In its decision, the tribunal wrote that ''a man (whether hypothetical or actual) at roughly Ms. Villalba's level, about whom there had been similar performance concerns, would not have been treated more favorable.'' But, the ruling noted, Ms. Villalba, 42, was ''isolated and disrespected'' behind her back, particularly by the company's human resources department. E-mail messages between human resources personnel and some of Ms. Villalba's closest colleagues ''border on the vindictive,'' the decision said.

Merrill Lynch has been the focus of a wave of sexual discrimination claims in recent years. In the United States, the bank still faces about 30 such claims, most of them now in arbitration or mediation, down from about 900 made in 1999. Merrill has paid more than $100 million to settle those claims.

Photo: The ruling said that Stephanie Villalba had been treated poorly. (Photo by Graham Barclay/Bloomberg News)